Top brands and new product launches are reaching increasingly segmented consumer groups through targeted, measured innovation, according to market research firm IRI Inc., which released its “New Product Pacesetters” and “Growth Leaders in CPGs” survey results this month.
Yogurt brands grabbed three of the top 10 spots for IRI’s list of most profitable product launches in 2013, with Dannon’s Light & Fit Greek leading the way ($144.9 mn), Yoplait Greek 100 in second ($135 mn) and Muller Yogurt in sixth. Susan Viamari, editor, Thought Leadership at IRI, attributed yogurts’ success to the convergence of three powerful trends in food and beverage.
“The biggest one is consumers’ quest for portable forms of satiation. Our ‘How America eats’ report in September found that a quarter of consumers eat four or five mini meals throughout day, rather than following the traditional, three square meals a day pattern,” Viamari told FoodNavigator-USA. Indeed, another 21% consider themselves “grazers”, running through their day and only grabbing something to eat or drink when the opportunity arises. “These types of eating occasions mean consumers are now looking for portable satiation, which is helping yogurts.”
Coupled with the second trend—that two-thirds of consumers told IRI they’re trying to eat healthier—it’s no surprise that many are turning to yogurt as a “quick, easy way to support better nutrition efforts,” Viamari added. For many consumers, nutrition is equated not just with added nutrients or less fat and calories, but by a simplified ingredient label.
“In fact, one of the new packaging trends underscoring the health connotation is a reduction of–we’ll call them—‘less desirable’ characteristics,” Viamari said. “That could be measured in lower calories or fat, as well as less of those more complex, what-the-heck-are-they ingredients.”
The third trend yogurt satisfies is variety—which is in part a reaction to the prolonged economic downturn. “Over the past couple years, consumers made a lot of sacrifices with the downturn, keeping budgets in check and cutting back on eating out. But 26% are still looking for food products to add excitement in their daily diets. In those yogurt brands, you have all those things.”
Top F&B CPGs claw back market share with targeted innovation
Research from IRI and Boston Consulting found that small and extra-small (less than $100 million in sales) CPG firms collectively grew 4.3% in 2013, but the five top-ranked large companies recaptured market share with a renewed focus on delivering volume growth. The top two large F&B CPGs are the Hershey Co. and Mondelēz International. The top two mid-size firms (two years running) are Green Mountain Coffee Roasters Inc. and Chobani, followed by McKee Foods. Leading the small-company top performers is healthy bar manufacturer Kind.
Although Viamari wasn’t one of the report’s authors, she said the results mirror what's trending in new product pacesetters.
“I’d say smaller, disruptive brands are underscoring the fact that there are significant opportunities to be tapped into by honing in more on consumer segments,” she said, noting that wellness exemplifies this phenomenon. “The top seller in c-stores is Neuro Drinks, a line of natural beverages from Neuro Brands that naturally support wellness. There’s one for weight loss, relaxation, energy—all really targeted, wellness-related goals. Plum Organics organic baby food is another one on the list. These little guys are tackling opportunities to target finite consumer segments.”
Because consumers today are looking for more individualized attention, that gives these smaller companies the chance to innovate. “They can’t reach the whole wide world, but they can reach this group and have manufacturing capacity for this group. With social media, there’s less pressure on capacity side as well.”
Pepsico, Hershey find smart new revenue streams
But highly segmented consumer targeting isn’t limited to the small firms. Many of the bigger players are looking at more targeted innovation and finding great success.
“Pepsi this year launched Pepsi Next, a subsegment of the carbonated beverage market that’s marketed with real cola taste and 60% less sugar. At the same time, they’re building out other areas beyond carbonated beverages. They had a big hit with Tropicana Farmstand, which is a premium, 100% juice product with a full serving of veggies inside. Last year, Pepsi hit it big with RTD tea with Lipton 100% Naturals. Those are three very different segments, but Pepsi expanding into more niche areas and finding great success.”
Another big brand that’s successfully branched out is Hershey, Viamari added. “This year, they did really well with Hershey’s Simple Pleasures, a line of chocolate with 30% less fat than other alternatives that still taps into the desire for chocolate. They’re also doing well in the gourmet set with Brookside. These are more exotic chocolates with a chewy inside with exotic fruit juices and flavors from around the world. They’re even shaking up the hard candy segment with Ice Breakers.”
What these various brands have in common is they’re managing to capture increased shelf space with innovations that still jive with their base brand message.
“They’re getting outside their traditional space. They’re jumping into new areas, finding opportunities for new revenue streams. So if carbonated beverage may be shrinking, Pepsi has more revenue in juice now. Hershey is still in chocolate, but it’s also in non-chocolate candy and gourmet.”